Heavyweights Are Choosing Sides In Battle Over Next DVD Format

By KEN BELSON

Published: December 29, 2003

TOKYO, Dec. 28—
When Hisashi Yamada pulls back his bow, he thinks of only one thing: Hitting the bull's-eye 92 feet away.

''When I concentrate on the target,'' said Mr. Yamada, a champion archer who demonstrates his skill dressed in the traditional blue-and-white hakama, ''I forget about everything else.''

In his regular job, Mr. Yamada, a 60-year-old electrical engineer, is putting that same single-minded focus to work for the Toshiba Corporation, which is battling like a Japanese samurai warrior of old in a fight to the finish over whose format will be used in the next generation of DVD's.

The discs, which have been under development for several years, will hold four to five times more digital video and audio data than those now on the market. They are needed because broadcasters and movie studios are planning to take advantage of the spread of high-definition television screens to produce more digital programming with multitrack sound and much better resolution.

The new discs and their players will not be widely available until at least 2005, but already the world's largest electronics, computer and entertainment companies are embroiled in a multibillion-dollar fight over whose technology will become an industry standard.

The arguments are in many ways reminiscent of the Betamax-VHS showdown in the 1970's and the clashes over digital audiotape, compact discs and the original digital videodiscs released in 1997. As in those battles, technology is just the starting point for debates filled with emotion and industry politics.

Beyond the technical details like tracking speed and tilt is a serious tussle over how to divide -- and protect -- the billions of dollars in royalties from the licensing of this technology and the content sold on the discs. Also at stake is an effort by electronics makers to prevent emerging Chinese rivals and well-established Silicon Valley computer makers from making significant inroads into the home entertainment business.

''This is a very intense conflict over intellectual property,'' said Warren N. Lieberfarb, a driving force behind the development of the original DVD format. It has the added overlay, he said, ''of the Japanese, Korean and European consumer electronics industries fearing China's aggressively emerging consumer electronics industry as well as the PC industry.''

At the technological level, the combatants are divided roughly into two camps. Under Mr. Yamada's leadership, NEC and Toshiba have formed a group that has developed the HD (high definition) DVD, a disc that is 0.6 millimeter thick and made with machinery similar to that used for today's DVD's. On the other side is the 10-company Blu-ray Group, led by Sony and Matsushita, whose best-known brands are Panasonic and JVC. That group has developed a disc only 0.1 millimeter thick that can hold more data but needs additional investment to be produced. Information on the discs can be overwritten after it is recorded, something that is not possible with the HD DVD's now.

At 12 centimeters in diameter, both discs are similar to today's offerings, though Sony's discs are protected from fingerprints, dust and scratches by square plastic cartridges when not in use. The HD DVD group has developed a single lens that emits red and blue rays to read both current and next-generation discs. The Blu-ray machines require two separate lenses.

While the discs are still at least a year away from mass production, both sides are expected to be out in full body armor trying to win new allies at the big Consumer Electronics Show in Las Vegas, Jan. 8 through 11, where they are planning to show prototypes of their devices.

There are many battles left to fight, though, before these new DVD's hit the shelves, and it is entirely possible that the camps will never reach a consensus, forcing consumers, retailers, movie studios and others to adapt, at least initially, to two competing standards.

In the Betamax-VHS war, one standard ultimately triumphed. That is an important reason the two chief antagonists in that fight -- Sony, the loser, and Matsushita, the winner -- are now allies. In the wake of other format conflicts, including the one over the first generation of DVD's, multiple standards co-exist, with the differences papered over by machines that can play several formats. But in other cases, including the development of higher-quality music discs, the disputes seem to have scared away consumers and retailers caught in the middle.

The ideal, everyone involved insists, is for one format to emerge as the winner so costs can be kept to a minimum. But as Mr. Yamada knows, that is about the only thing on which people can agree. In addition to his role at Toshiba, he is chairman of the powerful Technical Coordination Group at the DVD Forum, a six-year-old group of more than 200 companies that is trying to decide on one format.

In November, the HD DVD camp's specifications were endorsed by the forum's steering committee. The victory was significant, but tellingly contentious. The format was not approved until the third ballot, and only after voting rules were changed and several companies abstained. The Blu-ray Group did not submit specifications for a read-only disc, which Hollywood is eager to have for movie sales and rentals.

Mr. Yamada called the negotiations ''very delicate,'' and said the Blu-ray Group was trying to prevent the HD DVD from becoming the industry standard because it does not yet have a solid alternative.